Piracy Beyond P2P: One-Click Hosters

Sicko, Hostel 2, the new Fantastic Four flick: You can get all those summer blockbusters via BitTorrent. Of course, there is a small chance that you actually might get in trouble for doing so, which is why more and more people turn to so-called “one-click” hosting sites instead, where all these movies are readily available for download as well.

One-click hosting has become a huge business during the last few years. The two market leaders RapidShare.com and Megaupload.com claim to each transfer more than a hundred terabyte of data every single day. Rights holders are slowly waking up to this trend — and suddenly realize that this is the cruel revenge of the market place for their file-sharing lawsuits.

Most one-click hosters have a fairly simple business model: They allow their users to upload a file without prior registration. Users in return get a link that they can forward to their friends or publish on their own website. Downloaders have to click through to the hosting website to access the file.

Paying members get access to the files they want right away, all other users have to wait in line. RapidShare makes its users wait up to a few hours until they can access their next download. This experience can be so time-consuming and frustrating that you would think no one in their right mind would use services like this. Or, as FON founder Martin Varsavsky recently put it:

“I have had a hard time understanding the massive popularity of these sites as they are much harder to use than Azureus. If anything they show that while people are not willing to pay for video content in iTunes or in cash, they seem to have not problem in paying for it in sweat.”

And in sweat they pay: Megaupload, RapidShare & Co. are hugely popular. The admittedly not too accurate Alexa index lists them as number 13 and 18 of the most popular sites on the web. Megaupload claims to have 1.5 million unique visitors per day. A RapidShare spokesperson told me that their site transfers a couple hundred terabytes of data on a daily basis. The company claims to have 1500 terabytes of hard disk space and 110 gigabits connectivity available for their customers.

There is also a huge ecosystem around each of the bigger one-click hosters. Indexing sites like Link.io list thousands of videos, applications, magazines and other files. There are tons of specialized tools and download managers available as well. Some are officially sanctioned by the hosters, others are meant to circumvent the restrictions imposed on free accounts. There are even some bizarre websites that offer paid accounts to make better use of your free RapidShare account.

RapidShare and Megaupload don’t allow people to use their service for copyright infringement and regularly remove infringing content upon notice, but they don’t scour the link directories themselves. “Hosting providers don’t have to police proactively”, says a RapidShare spokesperson.

One-click hosters are in fact protected by the safe harbor provisions of the Digital Millennium Copyright Act under U.S. law. Touching this protection would spell trouble for Photobucket, AOL’s XDrive, Box.net and tons of other free hosting services, but it might not affect most one-click services. RapidShare is incorporated in Switzerland and hosts its servers in Germany. Megaupload is based in Hong Kong. Rapidshare has been sued by German rights holders. The company has answered with a countersuit and the issue is still pending in court.

It’s unlikely that RapidShare will be forced to shut down any time soon, but there are plenty of services waiting to fill the gap already. Some of them are starting to attract big advertisers. Megaupload recently featured campaigns of Microsoft, Levi’s, McDonalds and Coca Cola.

This must feel like a slap in the face for rights holders organizations that have spent years to sue P2P operators and thousands of their users to make file sharing networks less profitable and attractive. To some degree, they succeeded – and in turn helped to build a whole new industry that makes companies like Grokster look like small fish.